Sturgeon in ‘tartan tax’ row over bid for control of personal allowance

The First Minister said the proposals for devolved powers drawn up by the Smith Commission failed to include the “key lever” of the income tax personal allowance – the amount people can earn before they have to pay.

Last week the cross-party body recommended the Scottish Parliament should be able to set its own income tax rates, with all of the cash earned staying north of the Border.

But while it said there should be “no restrictions on the thresholds or rates the Scottish Parliament can set” on income tax, it said all other aspects of the levy would remain reserved to Westminster, including the personal allowance.

Speaking on Sky News, Ms Sturgeon said: “The Smith Commission recommends income tax be devolved, though interestingly it says the personal allowance of income tax, which is one of the key levers you could use to lift people out of poverty, should remain reserved to Westminster.”

“In the independence White Paper the SNP proposed £450 more tax for those on low and middle incomes.

A new tartan tax for hard-pressed workers is the last thing Scotland needs

Willie Rennie, Lib Dem leader

“The last thing low earners need just now is to pay more tax but it seems that is what the SNP want to do.

“A new tartan tax for hard-pressed workers is the last thing Scotland needs.”

He said Liberal Democrats in the UK coalition government had “cut tax for low and middle earners by £800 thanks to the increase in the personal allowance to £10,000”.

Mr Rennie added: “The only reason the SNP must want the devolution of the personal allowance is to put income tax up for hard-pressed workers.”

A spokesman for the First Minister said: “The reason we want Scotland to have full responsibility for all tax and welfare is simple – to create a more prosperous and fairer country, and to stop the punitive austerity agenda which the Lib Dems are helping the Tories implement at Westminster and which is causing such hardship for so many across Scotland.”

In a move set to provoke another spat between Westminster and Holyrood, Chancellor George Osborne is expected to give Northern Ireland the power to set its own corporation tax rate in this week’s Autumn Statement.

Ms Sturgeon said that if that happened “then there is no argument that says it shouldn’t also be devolved to Scotland”.